Some of Europe's largest investors are showing increased interest in hedge fund managers in Asia, and advisers based out in the region are emphasising the industry has changed significantly since the crisis.
“However, if Korea’s government is really supporting [the industry] to make it work, then the government can do something to allow or promote it to investors, so companies like a life insurance group or institutions will go to it. The government wants to see local investors investing back into their local talent.”
Lau says Korean managers should have a clear edge in analysing and investing in their home market.
“You need local managers to understand local companies and quite often you need language and local culture embedded into [fund] companies. Local fund managers can read between the lines [of company reports], even for a Korean who has grown up in London or the US.”
Lau says, over time, Korea’s hedge industry will develop beyond its present bias of over 50% in equity long/short, but at the moment Korea’s markets are “not deep enough with credit or corporate arbitrage [opportunities] for managers in those strategies just to go into the single market”.